Through Spring Labs’ ky0x Digital Passport, U.S. credit reporting firm TransUnion will let customers share their credit history with companies operating on the blockchain. The service promises lower interest rates for most consumers, TransUnion said; in some cases, customers may receive loans that don’t require any collateral at all.

Why should we care?
Institutional verification of a consumer’s reliability helps this new initiative jump over a current blockchain-based hurdle: user uniformity through relative anonymity. Know-your-customer and anti-money laundering (KYC/AML) checks through ky0x will let lenders create tiers according to consumer trustworthiness, helping lenders assume relatively less risk when issuing loans, and reducing the need for high interest rates as well as collateral in some contexts. The move boosts competition between traditional lending services and their blockchain-based counterparts, which may spur significant growth in the latter sector. Of course, it also remains to be seen how larger blockchain-based communities will respond to this news. Many users joined crypto communities to get away from the unfavorable credit scores and debts awaiting them in traditional financial systems. Therefore wary of institutional encroachment, some may interpret this development as a sign of Web3’s cooptation by corporate giants, and the stratified services their scoring systems portend.